Amazon: Becoming the Everything Store
Amazon is forecasted to generate $137 billion in revenue in 2016. That’s approximately $50 billion more than Microsoft or Google, give or take a few billion, and five times as much as Facebook.*
Amazon is a behemoth, and they’re only going to get bigger. They’ve done well as a device maker with the Kindle and the Echo. The’ve taken a large portion of the web services market with AWS, and they’re making credible moves as a media company with Amazon Instant Video. They even won Golden Globe this year.
Despite their success elsewhere, Amazon’s core business is still as a commerce platform. They want to be the everything store, and they’re taking 3 large steps towards making that a reality.
Alexa
Takeaway: Alexa is good tech that is differentiated from its competition because it drives revenue by removing friction from buying things on Amazon.com.
Alexa was the darling child of CES 2017. It has been integrated into countless tech toys from Fords to refrigerators to cute robots. Alexa has received incredibly positive press coverage since it was release, and according to many analysts, Alexa has given Amazon a commanding lead in the home automation and personal assistant markets.
One thing that separates Amazon’s approach with Alexa from their largest competitors, Google and Apple, is their monetization strategy. Amazon can sell low-cost devices with incredible services, because Alexa makes Amazon.com purchases a breeze.
If you run out of toilet paper, you can simply ask Alexa to order some more. She'll find what you've bought in the past, confirm you would like it again and make sure a package of toilet paper arrives at your doorstep in two days or less.
Third-party Retailers
Takeaway: Amazon is bringing third-party retailers into the fold to expand its reach and grow its platform.
Over the past week, two Amazon initiatives have been reported that will draw more third-party retailers to sell through Amazon.
Shopify, "the leading cloudbased, multichannel commerce platform designed for small and medium-sized businesses", announced an integration with Amazon. This will make it easier to sell products on Amazon alongside custom Shopify stores. It provides a unified interface for managing both stores.
On the same day, The Information reported on a new offering that will allow third-party retailers to leverage the Amazon apps to sell on mobile. This offering provides retailers with the exposure through the popular Amazon apps while pushing more people to use it and giving Amazon access to the retailer's customer data.
Physical Stores
Takeaway: Amazon has created the future of brick and mortar shopping with Amazon Go.
Amazon is also moving into brick and mortar stores, but they've added a twist. They just opened a shop in Seattle called Amazon Go. It’s a grocery/convenience store reimagined with most of the labor automated.
You walk in, scan your phone, pick up any items you want to buy and walk out. Amazon uses their technology to track what you’ve taken with you, charges you for your purchases and sends you a receipt a few minutes later.
This is a prototype store. It will take years for them to spread across the world, but they will. The largest expense of grocery stores (after cost of goods sold) is labor, according to a study done by the government of Canada. Amazon Go will greatly reduce that cost, positioning Amazon to offer lower prices and put traditional retailers out of business.
Amazon will iterate on this idea, and these types of stores will become common very soon. Amazon has created the future of brick and mortar shopping.
Amazon is a lot of things. They're a commerce company, a tech company, a platform company and more. They're taking big steps towards becoming the everything store, and this is just the beginning.
*Q4 results aren’t out yet so these numbers are forecasts. Forecasts source.
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